Most of us have been there at some point in our lives: down on our luck and flat broke to boot. Luckily, in many places there have been banks and even small stores ready to issue payday loans to help get us through whatever hardships we are currently facing. Unfortunately, even the banks and, more specifically, the United States Postal Service are starting to feel the crunch of economic hardship themselves, and payday loans are in jeopardy. Or are they?

The first problem facing stores and websites like http://www.payday-loansuk.org.uk that offer payday loans is that customers just can't afford the interest rates in our current economic climate. If circumstances change or the borrower is irresponsible and cannot pay the loan back by the appointed time, he or she can face massive charges in interest. A person taking a payday loan of about $4,000 and winding up paying more than $5,000 in interest isn't entirely unheard of. Changes in your financial circumstances are a reasonable excuse, but much of this behavior comes from lack of responsibility. Many people take out payday loans knowing that they don't make enough money to pay it back at the appointed time, and they are also fully away of the high interest associated with these loans, and because of this, we may pay the price.

Proposed legislation in Alabama has stores closing their doors for good. Lawmakers are hoping to cap the limit on interest regarding payday loans to an annual 36%. Its proponents claim that by capping the interest, such short-term loans won't become lifetime commitments, and the people who take out such loans will be able to see the light of day.

Payday loans for desperate situations

On the other hand, it's opponents claim that payday loans are beneficial for those who are in desperate situations and cannot get regular loans. Usually, these people have poor credit ratings or other history that makes them a high risk for lenders. Because of the great risk, interest rates must remain high to ensure that the store or bank still makes a profit.

We must also not forget the USPS and the way it's been floundering since the invention of email, Facebook, and other electronic ways to communicate. In an effort to save the postal service from extinction, there are further government proposals designed to replace the stores that offer payday loans by allowing the post office to handle basic banking.

But does this spell the end of payday loans? There's good reason to doubt it. For one, payday loans are popular worldwide, and while this might curb some Americans from getting such loans, the rest of the world will be happily signing contracts. Also, the best places to get payday loans, or anything really, is the Internet nowadays. A quick Google search will bring in thousands of results, so if you can't get a short-term loan near you or your bank doesn't offer one, the Internet is right there to help you.

Ultimately, I think these trends and laws will affect physical stores, but such services will continue to flourish online. Payday loans are under attack, but the chances of losing them in a net of government bureaucracy is slim. Only the people will decide what the future of such loans will be, and where there is demand, there is supply.

In a surprising but welcome move, UK building societies have decided to join credit unions and waive off outstanding loans of individuals who are unable to repay loans. The decision is expected to deflect hapless borrowers from falling victims to predatory payday loan lenders. The UK economy went into recession in 2008/2009 and the payday loans sector has grown into a huge industry raking in revenues amounting to 2.3 billion pounds per year.

It's common to find individuals taking out payday loans to pay off mortgages

Cuna Mutual, one of the world's leading loan insurance providers, is slated to help restructure the insurance cover for UK credit unions. The intention is to incorporate their existing cover with more waivers so as to help them compete with exploitative payday loans providers. Cuna Mutual will also work with UK building societies to help them offer waivers to those who have a genuine problem repaying loans.

CEO of Cuna Mutual, Europe, Paul Walsh, said that the plan had so far proved so successful that an increasing number of building societies were opting for debt waiver insurance. This in turn allowed them to be of more service to people who required financial assistance. As a result, fewer people are expected to turn to predatory payday loan lenders to bail them out of stressful situations.

Currently, Cuna Mutual is working on a first-time-mortgage scheme with UK building societies. Increasing competition to Britain's burgeoning money shops has become a matter of priority to protect consumer interests and battle resilient payday loan lenders.

Credit Unions Using Waivers for Financially Disadvantaged Borrowers

Certain enterprising UK credit union like the Clockwise Credit Union located in the Midlands has already begun offering loans fortified with waivers in the event of inability to repay the loan. The Clockwise Credit Union already has 8500 borrowers being served across 10 community service points across Britain.

Credit Unions are an excellent alternative to payday loan lenders. They offer responsible loan rates and have a range of stable financial products like mortgages and even current accounts. The idea is to develop the loan products of credit unions so that they are able to offer financial relief even though the borrower may not have the means to repay the loan.

Mark Lyonette, CEO of the ABCU (Association of British Credit Unions), said that an individual's financial circumstances could often change during the term of a loan. This is where a waiver would come in handy. Payday loans are seldom waived attract very high rates of interest upon non-payment.

The unemployment problem plaguing the US may be affecting full recovery of the economy, but consumers are definitely more optimistic now as seen by the increased levels of spending in recent times. February’s statistics show that consumer spending steadily increased for the fifth month in a row, which is good news for policy makers, businesses, and the general public.However, the income levels of most Americans have not perked up to match the spending spike. The distressing unemployment levels are keeping employers cautious for now, with not many offering higher pay scales or hikes as yet.Housing market continuing to sufferAlthough the signs of recovery are evident in all sectors of the economy except the housing market, the massive setbacks caused by the recent recession are not likely to be forgotten anytime soon. People appear to have learned a valuable lesson from the recent downturn – that of treading with caution even in face of apparent prosperity.The growing optimism and evident improvement in industrial activity have helped boost confidence in the strength of the US economic recovery. This has led people to increase spending in spite of unchanging earnings. It means that consumers are drawing on savings to fund their spending. A 0.3 % spike was seen in spending levels in February as compared with the previous month, according to a Commerce Department report. The savings rate fell from over 4% last year to 3.1% in February. But economists point out that these levels are still representative of the cautious approach that most people are sticking to.Many economists assure that better times are ahead at least as far as the improving confidence of consumers is concerned. While the 9.7% unemployment rate will dampen matters somewhat, spending is still expected to rise. Experts are predicting that the government will be following the increased spending pattern with interest in the coming months to look for signs of inflation. However, they say that the Federal Reserve is still likely to hold back any interest rate hikes until the employment rates pick up too. This will give the economy a firm footing as normalcy is resumed.Although the employment picture is not clear enough as yet, there is expectation that March will show some new job creation. The unemployment level has somewhat stabilized and is no longer rocketing upwards. According to experts, it is just a matter of time before hiring kicks in.

Major insurers are trying to change their accounting practices in order to bypass some of the restrictions under the new healthcare law. The law requires that large group plans should spend 85% of the premium amount on actual medical care and small plans must spend 80% of the amount. But it seems insurance companies are now trying to pass some administrative costs as medical costs in order to circumvent the law.Some insurance companies saw their stocks fall after the health care reform bill was signed into law because of the requirements of the new medical loss ratio (MLR). MLR measures the spending by insurers and indicates their potential profits. To deal with the new rules regarding MLR, several insurance companies seem to be making controversial changes in their accounting practices.﻿Well Point Inc﻿For example, Well Point Inc. has reclassified millions of dollars from administrative costs to medical costs. Its spokesperson denied the charge and said that the company will cooperate with regulators for meeting MLR requirements.Other insurers are refusing to comment on the changes in accounting procedures and whether reclassifications are being done by them. Recent statistics show that insurance companies are currently quite far from the required spending levels under the new law – they spent about 74% of the money on medical costs on average last year. They continue to give more importance to making profits than to funding proper care for people. This is shown by the high percentage of non-medical costs in their MLR.Regulators at the Department of Health and Human Services have already started pushing insurers towards compliance to the new rules. It had held a meeting with the National Association of Insurance Commissioners, a major health insurance organization, for giving various recommendations to meet the new MLR requirements. The agency is also taking steps to release details on regulations quickly so that insurance companies have enough time to incorporate the changes. The new rule will come into effect by the start of the next year.There is likely to be a lot of criticism, and perhaps even regulatory action, if it is proven that dubious practices are being employed by insurance companies to show compliance to the new rules. The long struggle to bring in healthcare reform could prove futile if insurance companies do not follow both the letter and the spirit of the new law.